The odd couple

Both China and the US have profited and lost out in a bizarre yet unbreakable economic partnership. And though Beijing may effectively be embarking on an arms race, it does not yet have Washington’s strategic capability. This is the moment to rebalance relations

Over the past decade China’s gross domestic product has grown 10 times faster than that of the US: it rose from $1.1tr in 2000 to $5.88tr in 2010; US GDP went from $10tr to $14.6tr over the same period. Though for now China’s economy is far behind that of the US, experts predict it will catch up within the next 20 years.

China is gradually acquiring the attributes of a superpower. In 2011 its defence budget was $91.7bn, 1.8 times that of Japan and 3 times that of India. The gap between the Chinese and US defence budgets has also narrowed: in 2000 China’s defence budget was 1/20 of the US’s; today it is 1/7. Although still far behind the US, China is now the world’s second largest military spender and, if the US government continues to cut its budget, the gap could narrow still further.

Since the 2000s, relations between the two countries have greatly changed. China invests around one-third of its foreign exchange reserves in US Treasury bonds, which makes it Washington’s biggest creditor. As the world’s biggest exporter, it is also one of America’s biggest suppliers, and this helps the US to contain inflation.

Since the 2008 financial crisis, China has taken a firmer stance on the international scene and in its relations with the US. In 2009, at the Copenhagen summit, it opposed the US on the timetable for reducing carbon emissions. The same year, the Chinese navy harassed the USS Impeccable, which was cruising inside China’s exclusive economic zone in the South China Sea. In 2010 China resisted US pressure to condemn North Korea’s attack on the South Korean island of Yeonpyeong. Since 2011, it has also refused to comply with the embargo on Iranian oil, though it has taken a firmer stance on Tehran’s nuclear weapons programme.

This doesn’t stop China and the US from cooperating in a number of areas — the “war on terror”, preventing the proliferation of weapons of mass destruction (at least up to a point, given the difference in views on North Korea), and in attempts (...)